Univest Financial Corporation · NASDAQ:UVSP
Univest Financial — Investor Presentation (June 2024)
48 slides from Univest Financial's investor presentation, Jun 10, 2024
Slide 1: Investor Presentation June 10, 2024
Investor Presentation June 10, 2024
Slide 2: Safe Harbor Statement
Safe Harbor Statement Cautionary Note Regarding Forward-Looking Statements The information contained in this report may contain forward-looking statements. When used or incorporated by reference in disclosure documents, the words "believe," "anticipate," "estimate," "expect," "project," "target," "g
Slide 3: Safe Harbor Statement (cont'd)
Safe Harbor Statement (cont’d) Cautionary Note Regarding Forward-Looking Statements • Our ability to enter new markets successfully and capitalize on growth opportunities; • Competition for loans, deposits and employees; • System failures or cyber-security breaches of our information technology infr
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These non-GAAP measures include tangible common equity, core net interest income excludi
Slide 5: Company Overview
COMPANY OVERVIEW
Slide 6: Univest Company Overview
Univest Company Overview • Headquartered in Souderton, Pennsylvania (Montgomery County) • Bank founded in 1876, holding company formed in 1973 • Engaged in financial services business, providing full range of banking, insurance and wealth management services ◦ Comprehensive financial solutions deliv
Slide 7: UVSP by the Numbers
UVSP by the Numbers 7 7th Largest Diversified Financial Institution Headquartered in PA 4.3%1 Core PTPP-NCO2 <--5-year CAGR--> 7.6% TBV/Share Conservatively Managed Organic Growth Engine ~25% to ~30% Fee Income Business Revenue/Total 10.1% 5-yr CAGR Organic Loan Growth w/ Exceptional Asset Quality 9
Slide 8: Deposits and Liquidity Highlights
Deposits and Liquidity Highlights (As of March 31, 2024) 8 Committed borrowing capacity of $3.4 billion ($2.1 billion available1) Estimated unprotected deposits totaled $1.4 billion3 or 22.3% of total deposits Noninterest-bearing deposits represent 21.9% of total deposits Prudently managed investmen
Slide 9: Deposit and Liquidity Update
Deposit and Liquidity Update (As of May 31, 2024) 9 Deposits Dollars in thousands 3/31/24 % 5/31/24 % Change % Noninterest-Bearing Deposits $ 1,401,806 21.9% $ 1,390,582 21.8% $ (11,224) (0.8)% Demand Deposits 2,833,521 44.2% 2,789,215 43.7% (44,306) (1.6)% Savings Deposits 777,637 12.1% 763,041 12.
Slide 10: Executive Leadership Team
Executive Leadership Team 10 Name Age Tenure (yrs) with Univest Title Jeffrey M. Schweitzer 51 16 Chairman, President, and CEO, Univest Financial Corporation Michael S. Keim 56 15 Chief Operating Officer, Univest Financial Corporation and President, Univest Bank and Trust Co. Brian J. Richardson 41
Slide 11: Univest Primary Physical Service Area
Univest Primary Physical Service Area 11 KEY Headquarters Financial Center Regional Center Regional Center (Deposit Taking) Insurance Western PA Maryland Southeastern PA, Central PA and New Jersey
Slide 12: 2024 Strategy
2024 Strategy 12 Growth in Non-Interest Income Businesses: ■ Prioritize sustainable growth in non-interest income businesses as these businesses are less capital and liquidity intensive Improve Operating Leverage: ■ Execute on cost saving initiatives ■ Leverage investments in technology and process
Slide 13: Attractive Investment Opportunity
Attractive Investment Opportunity 13 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Based on price of $21.81 (represents average closing price 5/24/24-5/31/24). 3. Based on analyst average consensus of $2.10 EPS for 2025 (KBW projection of $2.15, Piper Sandler
Slide 14: Summary Financial Highlights
SUMMARY FINANCIAL HIGHLIGHTS
Slide 15: Q1 2024 Results
Q1 2024 Results 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Includes PA capital stock tax expense - increases efficiency ratio by approximately 180 bps 15 Earnings Loans & Deposits Key Ratios Reported Earnings: $20.3 million $0.69 per Share Core PTPP-NCO1: $
Slide 16: Core Pre-Tax Pre-Provision Income less Net Charge-Offs
$64,978 $68,620 $84,911 $85,340 $87,236 $108,434 $100,321 $22,155 2017 2018 2019 2020 2021 2022 2023 Q1 2024 $— $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 Core Pre-Tax Pre-Provision Income less Net Charge-Offs1 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation.
Slide 17: Tangible Book Value Per Share
$14.44 $15.24 $17.01 $17.66 $20.14 $20.42 $22.41 $22.70 2017 2018 2019 2020 2021 2022 2023 Q1 2024 $— $5.00 $10.00 $15.00 $20.00 $25.00 Tangible Book Value Per Share1 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Assumes no Wealth Management or Insurance acqui
Slide 18: Core PTPP-NCO ROAA & ROTE
Core PTPP- NCO ROAA & ROTE 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 1.49% 1.45% 1.63% 1.51% 1.37% 1.56% 1.33% 1.16% 2017 2018 2019 2020 2021 2022 2023 Q1 2024 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% 1.60% 1.70% 1.80% 1.90% 2.00% 19.54% 16.33% 18.20% 17.58% 15.77
Slide 19: Net Interest Income
Net Interest Income 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Pro forma tax equivalent margin calculation excludes purchase accounting accretion and is based upon a pro forma 21% tax rate for all periods presented 3. 2020 - 2022 Core Net Interest Income ex
Slide 20: Efficiency Ratio
62.5% 61.9% 61.4% 60.6% 60.9% 62.4% 66.0% 64.6% 60.8% 60.1% 60.2% 60.7% 63.2% 59.7% 62.0% 65.6% Reported Efficiency Ratio (Noninterest Expense/Tax Equivalent Revenue) Efficiency Ratio (Core Noninterest Expense Excluding PA Shares Tax/Core Tax Equivalent Revenue) (1),(2) 2017 2018 2019 2020 2021 2022
Slide 21: Revenue
Revenue 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. 2022 is a pro forma annualized figure - (YTD Q3/3x4) Revenue = Net Interest Income + Noninterest Income $ (0 00 ) N on-Interest Incom e % of Total R evenue Net Interest Income (excl PPP) Non-Interest Income
Slide 22: Fee Income
Fee Income 22 $55,963 $59,240 $60,173 $65,422 $78,328 $83,224 $77,885 $76,824 $25,595 33% 29% 28% 28% 32% 32% 26% 26% 33% Trust / Wealth Fee Income Insurance Fee Income Mortgage Banking Service Charges on Deposit Accounts Other Service Fee Income BOLI Other % of Total Revenue 2016 2017 2018 2019 202
Slide 23: Assets and Loans
Assets and Loans Chart data as of December 31 except for 2024 (3/31) Assets Excluding PPP Loans: 2020 = $5.9B, 2021 = $7.1B and 2022 = $7.2B $ (0 00 ) $4.2B $4.6B $5.0B $5.4B $6.3B $7.1B $7.2B $7.8B $7.7B Net Loans & Leases Total Investment Securities Other Assets Cash and Due From Banks 2016 2017 2
Slide 24: Liabilities and Deposits
Liabilities and Deposits Chart data as of December 31 except for 2024 (3/31) $ (0 00 ) $3.7B $4.0B $4.4B $4.7B $5.6B $6.3B $6.4B $6.9B $6.9B Interest-Bearing Deposits Noninterest-Bearing Deposits Borrowings Other Liabilities 2016 2017 2018 2019 2020 2021 2022 2023 2024 $0 $1,000,000 $2,000,000 $3,00
Slide 25: Stable Asset Quality
Stable Asset Quality Chart data as of December 31 except for 2024 (3/31) $ (0 00 ) Nonaccrual Loans and Leases ACL/nonaccrual loans and leases 2016 2017 2018 2019 2020 2021 2022 2023 2024 $— $10,000 $20,000 $30,000 $40,000 $50,000 0.0% 100.0% 200.0% 300.0% 400.0% 500.0% 600.0% 700.0% $ (0 00 ) Nonac
Slide 26: Current Expected Credit Loss (CECL)
Current Expected Credit Loss (CECL)1 26 1. Reflects the current expected credit loss for loans and leases only; excludes the current expected credit loss for investment securities and unfunded commitments 2020 2021 2022 2023 Q1 2024 Beginning of year Loan and Lease Reserve $ 35,331 $ 83,044 $ 71,924
Slide 27: Liquidity and Capital
LIQUIDITY AND CAPITAL
Slide 28: Liquidity and Capital
Liquidity and Capital All data in millions, as of 3/31/24 Balance Unused FHLB - Pittsburgh* $ 250.0 $ 1,919.7 Federal Fund Lines (9 Lenders)** — 334.0 FRB - Philadelphia — 176.4 Univest Financial Corp. LOC 1 — 10.0 Total $ 250.0 $ 2,440.1 *FHLB remaining capacity is less outstanding letters of credi
Slide 29: Strong Capital Ratios Provide for Operating Flexibility
Strong Capital Ratios Provide for Operating Flexibility 29 Tier 1 (Leverage) 8.84% 10.48% 10.13% 10.02% 9.08% 9.13% 9.81% 9.36% 9.65% 5.00% Required Capital Ratio with full Basel III phase-in Univest Financial Corp (3/31/24) 2016 2017 2018 2019 2020 2021 2022 2023 2024 —% 5.00% 10.00% 15.00% Tier 1
Slide 30: Largest Deposit Relationships
Largest Deposit Relationships 1 – As of 3/31/24 30 Deposits Balance Rank Type (000s) 1 Public Funds 159,197 2 Bus / Corp 74,502 3 Public Funds 70,338 4 Bus / Corp 46,103 5 Public Funds 44,559 6 Bus / Corp 42,880 7 Bus / Corp 40,607 8 Public Funds 39,087 9 Bus / Corp 38,497 10 Public Funds 38,093 11
Slide 31: Investments
Investments Corporate Bonds ($’s in millions) Moody’s Rating Aa3 1.0 Aa2 1.5 Aa1 — Aaa 0.5 A3 14.9 A2 20.5 A1 43.0 Baa2 — Baa1 — WR — N/A 10.0 Total 91.4 31 MBS/ CMO 82.3% Other 0.7% Corporate Bonds 16.8% Municipal Bonds 0.3% $498 Million at 3/31/24 Investment Portfolio Investment Portfolio Details
Slide 32: Loan Portfolio Detail and Credit Overview
LOAN PORTFOLIO DETAIL AND CREDIT OVERVIEW
Slide 33: Loan & Lease Detail
Loan & Lease Detail Chart Data is as of December 31 except for 2024 (3/31) 2020 - 2022 Total Loans excludes PPP 33 1,375 1,542 1,741 2,040 2,459 2,719 3,028 3,303 3,284 823 896 938 947 893 956 1,087 990 1,015 175 176 216 233 243 284 382 394 380 294 342 363 374 381 410 478 517 524 30 28 33 30 27 26 2
Slide 34: Largest Loan Exposures
Largest Loan Exposures – As of 3/31/24 34 Commercial Real Estate and Residential Real Estate Secured for Business Purposes Commercial & Industrial $4,188M | Avg Loan Size $603K $1,015M | Avg Loan Size $334K Risk Exposure Risk Exposure Rank Loan Type/Industry Rating (000s) Geography Rank Loan Type/In
Slide 35: Loan Portfolio Overview
Loan Portfolio Overview – As of 3/31/24 35 Industry Description Total Outstanding Balance % of Commercial Loan Portfolio CRE - Retail $ 465,915 9.0 % Animal Production 361,143 6.9 CRE - Multi-family 318,337 6.1 CRE - Office 298,301 5.7 CRE - 1-4 Family Residential Investment 289,167 5.6 CRE - Indust
Slide 36: Credit Infrastructure
Credit Infrastructure 36 Approval Process Credit / Risk Owns Borrower Risk Risk Assessment/Analysis Portfolio Risk Assessment Credit Risk Structure Underwriting Process Approval Sign-Off Independent Loan Review Line of Business Owns Borrower Relationship Business/Industry Expertise or Analysis Trans
Slide 37: Credit risk management and lending authority
• Limited single signature lending authority. Joint signature up to $10.0MM, then management level loan committee for the largest exposures. ◦ Itemized report of all closed loans of $500K or more reported weekly to Officers Loan Committee. • Robust independent loan review process, using team based a
Slide 38: Line of Business Overview
GUNIVEST Capi BANK AND TRUST CO. AUNIVEST WEALTH DIVISION Member FDIC LINE OF BUSINESS OVERVIEW alk WW y GUNIVEST UNIVEST HOME LOANS
Slide 39: Commercial Banking
Commercial Banking • As of 3/31/24, 87 lenders, relationship managers and portfolio managers operating in four divisions established by geography: ◦ East Penn and New Jersey: Bucks, Montgomery, Chester, Delaware, Berks, Philadelphia, Lehigh, and Northampton counties in Pennsylvania and Cape May, Atl
Slide 40: Consumer Banking
Consumer Banking • 27 financial service centers located in Bucks, Lancaster, Lehigh, Montgomery, Northampton and Philadelphia counties in PA; also operating 10 retirement centers in Bucks and Montgomery counties and 12 Regional Centers (Deposit Taking) • Proactively addressed continued reduction in
Slide 41: Mortgage Banking
Mortgage Banking • As of 3/31/24, 49 Loan Officers predominately operating in Bank’s core footprint • Primarily agency lender: FNMA, FHLMC, FHA, VA and USDA ◦ FNMA and FHLMC eligible loans sold with servicing retained ◦ GNMA issuer ◦ FHA, VA and USDA loans currently sold primarily to correspondents
Slide 42: Univest Capital, Inc.
Univest Capital, Inc. • Equipment financing business with $250 million in lease receivables as of 3/31/24 • Average lease size ~$47,000 typically with four-year term • Primary industries served: health care, education, automotive, golf/turf, C&I equipment and energy • Manage residual risk by primari
Slide 43: Wealth Management
Wealth Management • Comprehensive wealth management platform including broker / dealer, municipal pension services, registered investment advisor, retirement plan services and trust • The wealth management division operates under the Girard brand (i.e., Girard Advisory Services, LLC, Girard Benefits
Slide 44: Insurance
Insurance • Independent insurance agency with more than 60 carrier relationships • Full service agency providing commercial and personal lines, employee benefits and HR consulting solutions • Built via a series of eight acquisitions beginning in 2000 • Agent for written premiums of $213 million as o
Slide 45: Appendix (Non-GAAP Reconciliations)
APPENDIX (Non-GAAP Reconciliations)
Slide 46: Appendix – Non-GAAP Reconciliations
Appendix – Non-GAAP Reconciliations 1. Amount does not include mortgage servicing rights 2. Based upon a pro forma 21% tax rate for all periods presented. $’s in millions 2017 2018 2019 2020 2021 2022 2023 Q1 2024 1. Tangible Common Equity Shareholders' Equity $ 603,374 $ 624,133 $ 675,122 $ 692,472
Slide 47: Appendix – Non-GAAP Reconciliations (cont.)
Appendix – Non-GAAP Reconciliations (cont.) 1. Based upon a pro forma 21% tax rate for all periods presented. 2. Excess liquidity is defined by Management as Interest Earning Deposits with Other Banks greater than $40 million 47 $’s in millions 2017 2018 2019 2020 2021 2022 2023 Q1 2024 5. Core Tax
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